Investing is still the better bet

Next Tuesday, forget your office sweep. Ladies, leave your fascinators at home and guys, forget that hideous pink suit, black shirt and white leather shoes combination (it should never be worn regardless of the occasion).

With the Melbourne Cup set to run next Tuesday at 3pm, the country will once again stop and scream at the TV hoping that their horse crosses the line at Flemington first. Hundreds of millions of dollars are expected to be wagered around the country on the day.

Despite the Melbourne Cup being the only day that many have a bet, overall, Australian's are the biggest gamblers in the world. A 2010 report by the Productivity Commission estimates that around 70% of the adult population will gamble in some form during a year and on average lose $1,500 per person.

Such findings don't come as a surprise. We're bombarded with advertisements of online bookies during commercial breaks and no sports broadcast is complete without the expert commentary panel asking a bookie about what the odds say about the game. You can even wager who will win the US presidential election or The Bachelorette (I'll leave you to decide which one is more important). Finally, if it weren't for the pokies, pubs and clubs would struggle to survive without convincing people to pay more for a beer.

There's nothing wrong with having a punt (as long as you bet responsibly as they say), but what's surprising is the vast difference between the amount of people gambling and those that invest in the sharemarket. The most recent ASX Share Ownership survey estimates only around 36% of the population is exposed to listed investments (ignoring superannuation).

A quick comparison of the two leaves no question about which one is better for the wealth of Australians.

With the S&P/ASX 200 increasing more than 20% since the Productivity Commission released its report into gambling in June 2010, you would be up by around $320 if you invested $1,500 in ‘the market' rather than losing it gambling.

Also, as the share market tends to rise over the long term, your investment ‘winnings' are likely to increase rather than fall. This is not true for gambling where the house edge built into the games mean that you're more likely to lose money the longer you play.

The social aspect of gambling could easily be replaced by the formation of an investment club; where you and your friends pool money together and invest in some of Australia's best companies.

Call me boring, but I know where I would much rather put my money on Melbourne Cup day and it isn't on the horses. I have more faith in making money by investing in any of the 18 companies on our Buy List rather than the 24 horses running around Flemington on race day.